The Department of Agriculture’s farm-assistance payments: explained

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On August 27, 2018, Agriculture Secretary Sonny Perdue announced the first round of direct farm-assistance payments to be released through the Trump administration’s $12 billion trade mitigation package.

Arguing that these measures would serve as a stopgap until more lasting trade deals could be struck, Secretary Perdue told reporters that “It’s important to note all of this could go away tomorrow, if China and the other nations simply correct their behavior. But in the meantime, the programs we are announcing today buy time for the President to strike long-lasting trade deals to benefit our entire economy.”

These payments, totaling $4.7 billion, will be released through the Market Facilitation Program starting September 4, and will mainly go to soybean farmers, one of the groups most affected by retaliatory tariffs introduced amid ongoing trade disputes. Producers must first complete their harvest and then apply through the program. Applicants must have an adjusted gross income of less than $900,000 for tax years 2014, 2015, and 2016.

Another $1.2 billion was set aside to purchase surplus produce from farmers through the Agricultural Marketing Service. The majority of that assistance will go towards purchasing pork products, as well as apples, dairy products, and pistachios. The USDA aims to purchase high-value crops that were originally intended for export, but face more difficult markets in the face of global market instability.

In a press conference call, USDA Under Secretary for Marketing and Regulatory Programs Greg Ibach explained that “instead of just oranges, we will be buying extra fancy oranges.”

Another $200 million was set aside for developing overseas markets for US agricultural products, to be allocated through the Foreign Agricultural Service’s Agricultural Trade Promotion Program. 

The Trump administration can make all of these payments without first obtaining congressional authorization by taking advantage of a Depression-era statute—specifically the authority created under the Commodity Credit Corporation (CCC) Charter Act of 1933. Originally created to stabilize crop prices during the Great Depression, the CCC has the ability to borrow directly from the Treasury, with any losses restored through congressional appropriations to the Department of Agriculture.

Senator Pat Roberts (R-KS), chair of the Senate Agriculture Committee, welcomed the price supports, writing in a statement that, “I appreciate Secretary Perdue’s efforts to provide temporary relief to our hard-working farmers who are being affected by tariffs.” Agricultural groups welcomed the trade assistance, but cautioned that the prolonged effects of a trade war would outweigh any benefits from the assistance.

Michael Petefish, president of the Minnesota Soybean Growers Association, told NPR, “right now, farmers are hurting, and this aid will allow a momentary reprieve. Unfortunately, if this trade war continues much longer, this aid package will feel less like a Band-Aid, and more like a reminder of the trade relationships we lost and must rebuild.”

The USDA told reporters that they were prepared to release another round of payments in December. 

To learn more about trade policy under the Trump administration regarding tariffs, China, and trade agreements, download our US trade overview.